Cody Easterday, Washington Rancher At Heart Of Alleged Cattle Fraud, Pleads Guilty In Federal Court
Updated April 1, 2021, 5:50 p.m. PT:
Washington rancher Cody Easterday pleaded guilty Wednesday in federal district court to defrauding Tyson Foods Inc. and another company out of more than $244 million. Easterday admitted charging the companies for the costs of purchasing and feeding hundreds of thousands of fictitious cattle.
What’s the background on all this Easterday – Tyson “Cattlegate” stuff? See previous coverage from Anna King here.
Easterday’s scam worked like this as he operated ranches near the Washington’s Tri-Cities: He was under contract to get advances from Tyson Fresh Meats and another company to buy cattle, and raise those animals. Easterday did get those advances. And he did charge the companies for the feed. But hundreds of thousands of head of cattle were simply non-existent. Instead, he used some of the advance money to invest in the commodities market.
“Easterday used the fraud proceeds for his personal use and benefit, and for the benefit of Easterday Ranches, including to cover $200 million in commodity futures contracts trading losses that Easterday had incurred on behalf of Easterday Ranches,” a U.S. Department of Justice press release reads. “In connection with his commodity futures trading, Easterday also defrauded the CME Group Inc., which operates the world’s largest financial derivatives exchange.”
Legal experts say Easterday might face real time in a federal prison despite the plea deal.
Scott Schumacher teaches business and federal tax law at the University of Washington School of Law. He calls the Easterday case really unusual.
Schumacher, who was a DOJ prosecutor before teaching law, says this is a significant case. More often, a Ponzi scheme involves many businesses or people. It’s not common that one to two companies would be defrauded for so much money.
“Tyson is a big company that should have great internal controls for accounting and accounts payable and things like that. For them not to catch this for six years, I mean that’s really quite extraordinary,” Schumacher told the Northwest News Network.
Easterday pleaded guilty to wire fraud, meaning he likely used email, the telephone, a fax, wiring money and/or trades with the futures market that were fraudulent, Schumacher says.
Frank DiMarino is adjunct professor at the Seattle University School of Law and has taught investigation and prosecution of economic crimes to federal law enforcement officers. He says any prison time Easterday serves will be based “on the complexity of the scheme, the dollar amount of fraud, and his role in the scheme.”
Easterday has agreed to repay the $244 million, and faces a maximum of 20 years in prison. Schumacher says the rancher will likely face at least seven years of real prison time.
“The amount of evidence that the investigating agencies must have amassed would have been compelling,” DiMarino said. “Usually, they will plead not guilty. This evidence was so substantial he didn’t have a defense to the charges.”
Sentencing is scheduled for August 4.
Tyson vs Easterday Timeline:
- Early December 2020: Discovery — Tyson Fresh Meats says it found out about a “missing” 200,000 fake head of cattle (presumably Easterday);
- Dec 10, 2020: Tragedy — Family patriarch, Gale Easterday, dies in a head-on collision with an Easterday semi-truck in Pasco;
- Jan 22: Sale — Easterday Ranches records the sale of its “North Lot” property;
- Jan 25: Suit — Tyson Fresh Meats files suit in Franklin County Superior Court against Easterday Ranches;
- Feb 2: Bankruptcy — Easterday Ranches files bankruptcy;
- Feb 8: Bankruptcy — Easterday Farms files bankruptcy;
- Feb 8: Motion For Trustee — Tyson asks federal court for a trustee to take over Easterday Ranches;
- March 31: Guilty Plea — Cody Easterday, 49, pleads guilty to one count of wire fraud in federal district court and agreed to repay $244,031,132 in restitution.